Malaysia palm oil on a rebound

Malaysia palm oil on a rebound

KUALA LUMPUR (Reuters): Malaysian palm oil futures closed higher on Tuesday in a technical rebound after recent declines.

Traders said the market's ability to hold above some chart support levels prompted short covering.

"The market was a bit oversold and there was a lack of sellers. This triggered technical buying around the 1,160 ringgit level followed by trade buying at 1,180," a trader said.

Benchmark third position January crude palm oil futures closed 24 ringgit higher at 1,193 ringgit ($313.95) a ton.

Traders said the contract could test 1,200 ringgit on Wednesday if Chicago soyoil futures closed higher on Tuesday.

News that two cargoes of Indonesian crude palm oil had been blocked in Rotterdam due to diesel contamination aided the rise, traders said.

The Dutch Product Board for Margarine, Fats and Oils said in a statement on Tuesday immediate testing had shown contamination had occurred in three shipments from Belawan.

"The market is hungry for news and will jump on anything. Players are just looking for an excuse to buy," said another trader.

Traders said the market's rebound, however, could be short- lived amid growing domestic palm oil stocks and slowing demand.

"Market sentiment is still weak due to poor fundamentals," a trader said.

Private crop forecaster Ivan Wong last week projected an increase in stocks to 1.34 million tons at end-October against 1.21 million at end-September.

Cargo surveyor Societe Generale de Surveillance (SGS) on Monday estimated Malaysian palm oil exports for October 1-25 at 725,415 tons compared with 740,440 in September 1-25.

Physical prices also bounced back as crude palm oil attracted covering by refiners.

Oct/Nov (south) crude palm oil was offered at 1,210 ringgit a ton against bids at 1,205. It traded from 1,195 to 1,205 ringgit.

Among refined products, Nov and Dec RBD palm oil were offered at $340 a ton FOB, and Jan/Feb/Mar at $342.50.

Nov RBD palm olein saw offers at $365, Dec at $367.50 and Jan/Feb/Mar at $370. Nov RBD palm stearin was offered at $275 and Dec at $280, and Nov/Dec palm fatty acid distillate at $215.